FXCM just made a huge move forward in its forray into the institutional Forex market by acquiring Lucid Markets, the secretive institutional fx market maker. Lucid is considered to be one of the biggest market makers and feed providers in the institutional industry however little is known about the firm.
Lucid transacted an amazing $13.4 trillion in volume in 2011 - which is over $1.1 trillion a month which will definitely boost FXCM's institutional volume report next month..
The deal is FXCM's biggest by far and used quite a substantial amount of its available cash meaning that it's a hugely strategical move for FXCM which will from now on will also become a market market (through Lucid) for many institutional brokers.
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NEW YORK, NY – June 14, 2012 – FXCM Inc. (NYSE: FXCM), a leading online provider of foreign exchange, or FX, trading and related services worldwide, today announced that it has entered into a definitive agreement to acquire a 50% controlling interest in Lucid Markets Trading Ltd. and Lucid Markets LLP (“Lucid Markets”) for approximately $176 million, net of Lucid cash. The transaction is expected to close in the coming weeks and is subject to customary closing conditions.
Lucid Markets is a leading non-bank electronic market making and trading firm in the institutional foreign exchange market. In the twelve months ending December 31, 2011 under UK GAAP, Lucid had revenues of $148.9 million and earnings before interest, taxes, depreciation and amortization (EBITDA) of $113.4 million. Lucid traded $13.4 trillion of foreign exchange in 2011. The acquisition is intended to bolster FXCM’s institutional business and Lucid will not be a Liquidity provider to FXCM’s retail agency FX offering.
“FXCM has been transforming its institutional foreign exchange business in the past year,” said Drew Niv, Chief Executive Officer of FXCM. “Since the fourth quarter of last year we have been migrating customers to our own in-house institutional platform which we believe has made us more competitive in the institutional space and resulted in some significant increases in our institutional volume.”
“The acquisition of Lucid – a leader in market making and trading in the institutional FX market - is a natural extension of the evolution of our institutional business,” Niv continued. “They have demonstrated the ability to grow and deliver solid results across a range of market conditions. This transaction also adds the expertise and talents of one of the best firms in the FX world. We are most excited about the potential a Lucid/FXCM combination gives in serving our institutional clientele.”
Consideration payable for the acquisition consists of 6 month notes of $71.4 million plus Lucid cash acquired, bearing interest at 3.5% per annum, and 9.0 million FXCM Class A common shares, of which approximately 2 million shares will be delivered at closing and the remainder subject to certain restrictions. Under the terms of agreement, FXCM will receive an option to purchase an additional profit interest in Lucid’s operations in the future and if such option is not exercised within four years, Lucid shareholders will have a one-time option to purchase FXCM’s interest.
Conference Call
The Company will host a conference call today to discuss the acquisition at 8:15 a.m. (EST). This conference call will be available to domestic participants by dialing 866.202.3048 and 617.213.8843 for international participants. The conference ID number is 48924914.
A live, audio webcast and replay of this conference call will also be available at https://ir.fxcm.com/.
